>> Friday, November 4, 2011

This article may seem philosophical as I was listening to an interview with a successful trader recently and the topic was about trading the markets.

Naturally, the first question was how did he get so successful trading the markets?
In light humor fashion, he cheekily responded the question with a question, "Do you think it is because I am a financial guru that thoroughly understands the market inside out? What factors affects and influence at the macro and micro perspective?"

"Well, if you are expecting such a typical textbook answer, I must be is BS-ing you!"

He went on to explain that the only predictable thing about the market is that it is unpredictable. What is important is to focus on your interaction to this unpredictable animal, i.e. how do you perceive and react to the markets. Everything in this world is relative to the most important central element in your perspective, YOU!

Therefore, first and foremost, most importantly, you need to understand yourself. What is your trading psychology?

The market movement is all relative to you. The same market change of moving from an example value of 10 to 11 will mean different things to different people. Someone with a target of 10 and below will be in disbelief, whereas someone with a target of 11 and above will feel that it makes sense. It is that simple, the change is relative to the expectations.

There will be theories upon theories as to WHY the market moved from a 10 to an 11 but it does not change the fact that the movement has indeed occurred already. And more often than not, the movement has little to do with those theories.

Now observe your psychology towards this change, did you get stressed up, complain and get angry with the market when you were wrong; or did you get over excited, built your ego and set yourself to stick your neck out further when you were right; or did you calmly accept the fact regardless of the outcome, re-access the situation and focus on the next trade opportunity.

Trading is very different from investing, and psychology plays an enormous role for trading. It is really crucial to recognize and acknowledge the difference. Some say they invest but trade their holdings very often, some trade frequently but with the mentality of analyzing for investing.

Psychology is a diverse field that penetrates many different niches. http://www.psychologydegree.net/ is a directory consistently updated to keep up with important news, breakthroughs, and noteworthy studies made in the exciting field of psychology.

Featured Blogger

Singapore Memory Project

About Me

I hope that you will find this site useful and informative.
Do drop me your feedback on how i can further improve.
And should u have any queries and comments, please post them and i shall be more than happy to address them.

Labels

Disclaimer

Privacy

The owner of this blog does not share personal information with third-parties nor does the owner store information is collected about your visit for use other than to analyze content performance through the use of cookies, which you can turn off at anytime by modifying your Internet browser’s settings. The owner is not responsible for the republishing of the content found on this blog on other Web sites or media without permission.

Blog Comments

The owner of this blog reserves the right to edit or delete any comments submitted to this blog without notice due to;

1. Comments deemed to be spam or questionable spam2. Comments including profanity3. Comments containing language or concepts that could be deemed offensive4. Comments that attack a person individually

Terms and Conditions

All content provided on this blog is for informational purposes only. The owner of this blog makes no representations as to the accuracy or completeness of any information on this site or found by following any link on this site. The owner will not be liable for any errors or omissions in this information nor for the availability of this information. The owner will not be liable for any losses, injuries, or damages from the display or use of this information.

This policy is subject to change at anytime.

About This Blog

To promote the education of individuals for the need to have a healthy lifestyle and wealth management through proper financial planning, particularly in investments.